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Federal Communications Commission Chairman Tom Wheeler defended his network neutrality plan at length in front of the House committee that oversees the FCC today, and he also briefly discussed the proposed Comcast/Time Warner Cable and AT&T/DirecTV mergers.

Further Reading

Democratic representatives on the Energy and Commerce Committee's subcommittee on communications and technology urged Wheeler to draft a stronger network neutrality proposal that bans Internet "fast lanes" in which ISPs charge content providers for priority access to consumers. For example, a video provider like Netflix or Amazon could pay an ISP like Comcast or AT&T for faster access to consumers than services that don't pay the fees would receive.

Wheeler at one point today said he believes paid prioritization is commercially unreasonable. (The FCC proposal "would prohibit as commercially unreasonable those broadband providers’ practices that... threaten to harm Internet openness.")

So fast lanes would be banned? Not really, because Wheeler also said today that his proposal would view fast-lane deals on a case-by-case basis instead of blocking them outright. The FCC issued its proposed net neutrality rules last week, but it's asking the public for comment for four months before finalizing them. As it stands, Wheeler's proposal would establish a baseline level of service that ISPs have to give everyone while leaving the door open for special deals that provide better service.

Eshoo: "As a policy, not as a legal question, do you think that paid prioritization should be blocked outright?"

Wheeler: "So I have said that I don't believe there ought to be haves and have-nots…"

Eshoo: "Just answer my question. Just tell me, do you think that it should be blocked outright?"

Wheeler then referred to the federal appeals court decision that invalidated most of the FCC's previous network neutrality rules. The court said the FCC misused its authority under Section 706 of the Telecommunications Act, which requires the FCC to encourage the deployment of broadband infrastructure.

Wheeler still views the FCC's Section 706 authority as being substantial. He said:

We have asked that question [whether fast lanes should be banned] in the rulemaking and what I have said is that I believe under Section 706 anything that is anti-competitive or anti-consumer is competitively unreasonable and therefore can and should be blocked. And that becomes the trigger for how you deal with paid prioritization…

When the court gave us our instructions they talked about what they called a virtuous cycle, and that is that content drives the need for conduit, which then creates the opportunity for content, and this cycle is what it is our responsibility to protect, and that's what Section 706 authorizes. And so my proposal is that we take them up on that and we say if there is something which interferes with that virtuous cycle—which I believe paid prioritization does—that then we can move against it.

Later, Wheeler said, "What we're trying to do in this item is to say that anything that affects this virtuous cycle is not appropriate, is unlawful, and that would include paid prioritization. Now, the court told us to look at this on a case-by-base basis. We have asked the question in the ruling as to whether we should look at it generically and say it's all out."

“Suppose Netflix entered an exclusive relationship with AT&T or Comcast”

US Rep. Henry Waxman (D-CA) urged Wheeler to reclassify broadband as a telecommunications service, which would allow the commission to impose stronger, public utility-style rules under Title II of the Communications Act. Network neutrality advocates argue that Title II will give the commission greater authority to ban paid prioritization and make the rules more likely to stand up to court challenge.

Waxman pointed out that the FCC's proposed rules include a presumption that "priority service offered exclusively by a broadband provider to an affiliate should be considered illegal until proven otherwise." An affiliated service is one that the broadband provider offers itself over its network in competition against other Internet services.

Waxman asked why the presumption against exclusive arrangements should be limited to affiliates. "Suppose Netflix entered into an exclusive relationship with AT&T or Comcast for faster speeds for videos, [and that deal] blocked competitors like Amazon Prime from getting similar service, I think that would be a serious threat to competition on the Internet," Waxman said. "Yet your proposal does not create a presumption against these exclusive arrangements. Why would you allow any exclusive arrangement that guarantees some content providers faster speeds than competitors can access?"

Wheeler responded that any fast lane arrangement that degrades service for others "would be commercially unreasonable under our proposal."

Waxman then urged Wheeler to include a presumption that all paid prioritization is illegal in the FCC's final rules. "I just want to say to you that I'm opposed to any form of paid prioritization," Waxman said. "Prioritization divides the Internet into haves and have-nots and will entrench the big companies at the expense of startups." Waxman said the FCC's current proposal uses a "multi-factor test on whether paid prioritization is permissible. My concern is this will create a lot of ambiguity and a lot of litigation. I believe bright lines would be better for the market and innovation."

The FCC's previous rules that were struck down had ambiguity as well. The restrictions against blocking and prioritization had exceptions for "reasonable network management" and "specialized services" such as an ISP's VoIP offering.

Rep. Doris Matsui (D-CA) likewise told Wheeler that she believes paid prioritization should be banned outright. She also brought up paid peering connections in which Netflix has—under protest—paid Verizon and Comcast for direct connections to the ISPs' networks. Matsui said these two issues could prevent the "next Google or Amazon" from succeeding without anyone even realizing it.

Wheeler said the FCC will deal with peering separately from its net neutrality proceeding, but that peering is something that "the commission needs to look at and will be looking at."

On the other side of the aisle, Republicans urged Wheeler not to issue Title II rules on broadband providers.

"Not only is Chairman Wheeler leading us down this path again, the item the commission adopted last week tees up the long dead idea that the Internet is a common carrier," Subcommittee Chairman Greg Walden (R-OR) said in a prepared statement. "This reinvigorated willingness to consider regulating the Internet under Title II of the Communications Act—rules that find their roots in 19th century railroad regulation and were designed to regulate the world of a telephone monopoly—harken back to a world in which a twisted copper was the only portal for consumers to the communications network and voice was the only service."

Walden claimed that use of Title II would turn the FCC into "a rate-setting authority over Internet access." Net neutrality proponents have pointed out that this isn't necessarily true, as the FCC can issue Title II rules on Internet service without enforcing every possible Title II rule.

Don’t forget about the ISP mergers

Later in the hearing, US Rep. Diana DeGette (D-CO) brought up the proposed Comcast/Time Warner Cable and AT&T/DirecTV mergers. She pointed back to the FCC's approval (under previous Chairman Julius Genachowski) of the Comcast/NBCUniversal merger with conditions, asking Wheeler if he believes the conditions promoted the public interest.

"I think there were multiple things in it that promoted the public interest," he said.

When asked what other lessons he takes away from the commission's previous attempts to place conditions on mergers, Wheeler said that it's an important role for the FCC. "I strongly believe there is a big difference between the kind of statutory rigidity the Justice Department is required to look at mergers with and the kind of broader public interest issues that you've raised that the statute asks the FCC to look at," he said.